Ambidextrous Firms: Managing Individual and Organizational Identities in the Quest for Performance

Abstract

Ambidexterity research has repeatedly asserted that firms simultaneously engaging in both exploitation and exploration achieve above average firm performance. Yet, empirical findings remain puzzling and no consistent positive performance implication has been corroborated. While the majority of analysis on firm performance has been conducted on the firm level, we claim that a possible explanation for these mixed findings resides in the fact that the individual and firm level has yet to be considered though a multi-level model. Researchers have repeatedly emphasized the importance of the individual as the executor of exploitation and exploration and the need to reflect the escalation of conduct from the micro to the macro level. Based on identity theory, we develop a model that depicts how individual and organizational features interact and impact the performance effects of ambidexterity. Identity theory suggests that individuals hold a portfolio of role identities - frameworks that direct individuals’ behavior within an organizational setting. An individual’s preference to blur or separate role domains, through role segmentation or integration, affects an individual’s ability to move between multiple, possibly conflicting demands such as exploitation and exploration. Organizational identity, on the other hand, affirms that organizations similarly bear multiple identities, which are either holographically (equally) or ideographically (departmentally) reflected throughout the organization. In matching individual inclinations for role management and organizational identity structures, we claim that contextual or structural ambidexterity is not freely applicable to any type of organizations, inferring inconsistent performance effects.